Sony Computer Entertainment has released what some analysts believe will be its last portable gaming device. PlayStation (PS) Vita launched today in the U.S., Europe and Australia with two models, a $300 AT&T 3G/Wi-Fi device and a $250 Wi-Fi version. Michael Pachter, videogame analyst for Wedbush Morgan Securities, forecasts that Sony will sell 4.3 million pieces of hardware globally this year, including 1.5 million in the U.S., 1.5 million in Japan and 1.3 million in Europe.

If Sony cuts the hardware price of the device, research firm Strategy Analytics forecasts PlayStation Vita will sell 12.4 million units globally this year. When adding in sales of software to hardware, Sony could make $2.2 billion this year from its new portable.

“We believe that PlayStation Vita will cause Sony’s 2012 portable console software revenue to grow by $800 million compared with 2011,” said Jia Wu, Senior Analyst for Connected Home Devices at Strategy Analytics. “The real value of the PlayStation Vita is its drive for content revenue growth and its strategic position in Sony’s entertainment ecosystem.”

John Koller, director of hardware marketing, Sony Computer Entertainment America, said that Sony has a 10-year plan for PS Vita, just as the company has continued to market PlayStation 2 and PlayStation 3 for the long-term. But things are evolving at a much faster rate in the portable games space than in the home console market.

“Smartphone and tablet games are going to nibble away at the portable gaming market, particularly with the more casual gaming audience,” said Pachter. “I think that 10 years ago, every kid under 12 wanted a Game Boy; now every kid under 12 wants an iPad or a smartphone. That has to hurt dedicated handheld gaming device sales. The addressable market is going to continue to shrink for Nintendo and Sony, and their devices will be competitive enough with one another that neither will likely ever hit the kind of numbers we saw from the Nintendo DS.”

After a slow start, Nintendo 3DS did become a hot seller last year. But not until the price point was lowered from $250 to $170 and stronger franchise games were released. Nintendo went on to sell 8 million 3DS systems last year, including 4 million in the U.S. Sony’s PS Vita debuts at that same $250 price point, which is lower than an iPad but is on par with the new Tegra 3-equipped Asus Eee Pad Transformer Prime tablet. Tegra 3 technology features quad-core gaming experiences that are quickly gaining speed on current console games. For now, though PS Vita does deliver much deeper gaming experiences.

Sony has released 25 games for launch, including a collection of first-party titles like Uncharted: Golden Abyss, WipeOut 2048 and Escape Plan and third-party games like Electronic Arts’ EA Sports FIFA Soccer, Capcom’s Ultimate Capcom vs. Marvel 3 and Namco Bandai Games America’s Touch My Katamari. An additional 70 games are in development around the globe with all the major publishers supporting the new device.

“The large lineup will help sell systems, and clearly, Sony learned something from Nintendo’s mistake with a light 3DS launch lineup,” said PJ McNealy, videogame analyst at Digital World Research.

Both the hardware and the games, which take advantage of the 5-inch, touch-screen, OLED display, back touch bad and dual analog control sticks, are receiving strong reviews from core gaming media. And that’s exactly who Sony is targeting at launch, according to Koller.

“If you’re looking for those deep, rich gaming experiences, you’re able to get that on Vita as well as those new ways to play,” said Koller. “The new ways to control your games, whether it’s dual analog sticks, rear touch, motion sensor, augmented reality or location-based gaming, all the different ways that you’re able to interact with your character and your gaming experience I think really make it unique. And then Vita’s also powerful enough to play the smaller games, which gives consumers a strong range of titles that you don’t have on tablets or smartphones.”

Consumers purchased over 60 million tablets last year. According to research firm IHS iSuppli, that number will reach 262.1 million units by 2015, rising at a 72.1 percent compound annual growth rate from 17.4 million units sold in 2010.

As prices drop on tablets thanks to more competition in the Android marketplace, there’s also a new battlefield emerging between Intel and NVIDIA to deliver more powerful chips to portable devices. That, in turn, is offering game developers the ability to deliver gameplay experiences that are becoming more like the console titles people play at home on their big screen TV. Many tablets today actually allow gamers to stream games to their HD TV and even play with traditional game controllers.

Billy Pidgeon, videogame analystat M2 Research, sees tablets and dedicated gaming handhelds as two different markets that are in flux with unique and separate challenges and opportunities.

“There's a niche high unit value, low volume game entertainment market for the dedicated gaming handhelds sector dominated by Nintendo and Sony, and there's a completely different mainstream low unit value high volume app/game market for convergent handhelds dominated by Apple and Android,” said Pidgeon. “There is consumer overlap between these markets, but the mediums are fundamentally different. Each delivers a unique experiential level and each has a unique ecosystem. Most gamers looking for an experience on the level of a current generation Assassin's Creed or Legend of Zelda game aren't going to be satisfied by the mobile version of Assassin's Creed or even Infinity Blade, as good as those games are, and most publishers

aren't going to get return on their development investment on a high end game at a price point of $9.99 or less in the App Store or the Android Market.”

Price points also could play a role in Sony’s success. PS Vita games range from $30 to $50 each. And while the new cross-play technology, which allows gamers to start a baseball season in MLB 12: The Show on PS3 and continue it on PS Vita is a cool concept, consumers will have to purchase both versions of the game to do this. Vita’s games are currently the most expensive out there in the handheld market, just as consumers are getting more used to free-to-play mobile offerings.

Sony is delivering traditional entertainment with the Vita. Netflix is available on the device and Sony will soon release its Music Unlimited digital subscription service for the device. Movies and TV shows will also be available for the portable through PlayStation Network, just as they are for PS3. Internet connectivity will also open up Facebook, Twitter, flickr, foursquare and Skype options on the device.

“Despite protestations to the contrary, Sony is late to the smartphone and tablet markets on a global basis,” said McNealy. “Having severed Ericsson from the smartphone division should free up Sony to bring PlayStation-branded phones to the market in a way that only Sony can provide. Too little, too late? Maybe not. The Vita is getting some pretty good reviews.”

Koller said PS Vita will evolve over time through free firmware updates, just as PS3 has added new functionality over the years. This should allow the device to compete with new tablets and smartphones that will be entering the market on a regular basis. But as impressive as the hardware and games are, the key hurdle Sony will face with its new device is the price point for its hardware and software. If that can drop, more gamers are likely to gravitate towards PS Vita.